Shelby Sterling sits
with her husband, Donald, during a 2010 Los Angeles Clippers game against the
Detroit Pistons.

Former Los
Angeles Clippers co-owner Rochelle “Shelly” Sterling acted in the best
interests of the Sterling Family Trust by removing her estranged husband as
trustee and selling the NBA team to former Microsoft CEO Steve Ballmer, the
Court of Appeal for this district ruled yesterday.

“The credited
evidence overwhelmingly supported the probate court’s conclusion that exigent
circumstances warranted the sale of the Clippers to prevent extraordinary loss
to the trust,” Justice Madeleine Flier wrote for Div. Eight. “The probate
court’s sanctioning the sale was correct even though Donald [Sterling], who
initially agreed to the sale, purportedly revoked the trust in an effort to
block the sale.”

The Clippers
were sold for a record $2 billion after Donald Sterling was banned by NBA
Commissioner Adam Silver for making derogatory remarks about African Americans.
The remarks became public after a recording surfaced of Donald Sterling making
offensive comments to a young girlfriend about blacks and other minorities.

Donald Sterling,
81, has been a member of the State Bar since 1961 and became a billionaire
buying and selling apartment buildings in the Los Angeles area. Silver fined
him $2.5 million, ousted him from the league for life, and threatened to seize
and auction the team before Shelly Sterling acted.

She was able to
take control of the trust after two doctors found her husband of nearly six
decades had signs of Alzheimer’s disease. Donald Sterling sued to block the
sale, but Los Angeles Superior Court Judge Michael Levanas ruled against him
and approved the sale in July of last year.

Flier noted that
before Sterling refused to sign off on the sale, he had congratulated his wife
on the price she negotiated. “Wow, you really did a good job,” he exclaimed.

The price was
$400 million above the next best offer and far above what anyone thought the
team could be sold for, Shelly Sterling’s experts testified. Forbes magazine
had estimated the team to be worth $575 million.

Trust Provision

When Donald
Sterling reversed course, refused to sign the sale agreement, and threatened to
sue, Shelly Sterling properly invoked a trust provision that allowed a trustee
to be removed if two qualified physicians determined the trustee lacked
capacity, the justice said.

Flier cited the
testimony of a board-certified neurologist that Donald Sterling suffered “from
cognitive impairment secondary to primary dementia Alzheimer’s disease” and
that he was consequently “at risk of making potentially serious errors of
judgment.”

The other
examining physician was a geriatric psychiatrist who also said Sterling could
be at risk of making serious errors in judgment, that his performance on a
battery of tests was consisted with Alzheimer’s or a similar disease, and that
he was unable to manage his finances or serve as a trustee.

The appeal,
Flier said, suffered from numerous deficiencies, the most glaring of which was
that he failed to cite authority for the argument that the appellate court
could “undo” a sale after it was completed with probate court approval under
Probate Code §1310(b). The argument, the justice noted, conflicted with
Sterling’s argument in a prior writ petition, in which he unsuccessfully sought
to block the sale and argued that he would be without a remedy if the writ were
not granted.

Sufficient
Evidence

Flier also
concluded that there was sufficient evidence to overcome the statutory presumption
of competency, that the doctors appropriately considered the factors enumerated
in Probate Code §811 in reaching their conclusions, that the requirement that a
sale of trust property under §1310 be ordered only in extraordinary
circumstances was met, and that Donald Sterling’s revocation of the trust did
not preclude his wife, as the remaining trustee, from selling the Clippers
under her “wind up” powers set forth in §15407.